For a long time, lenders have not wanted to participate in most of Detroit.
There’s been no lending in the city for a long, long time, at least 10 years, since before the crash. In general, banks seem to not be interested in lending less than $50,000.
Maybe it’s driven by Fannie and Freddie requirements for conforming purchases or maybe it’s the banks themselves. Whatever the impetus, I do know that once banks start lending in an area where they have not formerly lent in, prices tend to go up dramatically.
It’s happening here now. And that’s great news.
On Detroit’s Southwest side, values have been rising like a hockey stick from values of $18-40K to as high as $160K.
In Detroit, almost all purchases in the city outside the premier areas like Midtown, New Center or Indian Village are cash sales. They’ve been that way for a decade.
But now we’re starting to see areas where banks are lending, and values are rising.
It happens fast and sharp.
We’re seeing it in West Village and Jefferson Chalmers. It’s coming in Bagley and University District.
Buyers beware – your values are at a crucial moment! Where before, you’d buy and hold for cash flow or flip for ROI, now you have an opportunity to buy and hold for capital appreciation, which can lead to solid, double digit returns and even higher in areas where before you could only experience cash low benefits.
This also means soon, we’ll be priced out of some neighborhoods. So get in while you can.
The Detroit real estate market is changing. We’re experiencing emergence in many neighborhoods with more poised to take off.
Soon enough, you’ll have a hard time finding a solid investment property for less than $50K. I’m fielding calls from banks that want to lend in Detroit. This is unusual.
It’s also exciting.